Should You 'Friend' Your Members?

CU360
August 6, 2009 | COMMENTS

The millions of social interactions occurring every second via various electronic networks, from Facebook to Twitter to YouTube, seemingly have very little to do with financial services marketing. But the connection may become more obvious in a few years. By then, research firm Gartner, Stamford, Conn., predicts 75% of financial institutions will deploy social media technology on their sites and through existing social networks.

Already, the technologies and principals of this new media are making inroads into banking. Several financial institutions host blogs aimed at reaching out to consumers in a more interactive fashion. Some use Twitter—a sort of hyped-up version of instant messaging—to resolve service issues. Others post videos on YouTube to showcase institution events or messages, and a handful have created their own Facebook pages.

Does it make sense for financial institutions to enter this new realm? Social media is at the same juncture today as the Web was 10 years ago, when financial institutions faced adopting it or fighting it, Ken Dec, director of strategic planning at Partners + Simons, a marketing communications firm in Boston, explained to Community Banker magazine. Institutions that embrace social media early will emerge as the industry's next marketing leaders, he believes. Others are more muted in their predictions.

Tim Parnell, president/CEO of Financial Marketing Solutions, Franklin, Tenn., tells the magazine that many reports indicate social media hasn't lived up to expectations of its effectiveness in marketing. "It's hard to figure out how to get on Facebook in a way that's meaningful," Parnell says.

Most institutions are advised to start small. One low-cost move that can have a big impact is simply to hire a "Millennial"—someone born after 1978—to participate in conversations about the brand. However small, financial institutions should be fully committed to the initiative, according to experts at Partners + Simon, noting there's nothing worse than a half-hearted effort.

As the younger population that grew up on social media becomes more financially mature, financial institutions may have to change their mostly hands-off attitude toward this technology. Until then, there's bound to be some tension as institutions and consumers figure out just how friendly they want to be with one another.